In brief: Queensland Court of Appeal overturns decision regarding whether counsel's fees are an outlay recoverable under regulation 137 of the Workers' Compensation and Rehabilitation Regulation 2014.
Background and the settlement agreement
The plaintiff claimed damages for personal injuries arising from a work-related incident against Pickles Auctions Pty Ltd (defendant). The proceeding was settled before a trial and a 'release and discharge' was executed by the plaintiff and defendant, along with the defendant's insurer, WorkCover Queensland (WorkCover).
A term of the release stated that WorkCover would pay the plaintiff's costs of, and incidental to the claim and proceeding calculated in accordance with Part 8, Division 2 of the Workers' Compensation and Rehabilitation Regulation 2014 (Qld) (Regulation), as agreed or as assessed. The Regulation is provided for under the Workers' Compensation and Rehabilitation Act 2003 (Act).
The plaintiff engaged both senior and junior counsel who were involved in various aspects of the case.
The parties were unable to agree to the calculation of the plaintiff's costs. An application was commenced to determine whether counsel's fees were a recoverable outlay under r137 of the Regulation.
Primary application: interpreting r137 and 'legal costs'
In the primary application, His Honour Cooper J considered that the only indication of an entitlement to recover counsel's fees that might be found in the text of r137 is the phrase 'in addition to legal costs'. His Honour then considered what was intended by the term 'legal costs' and noted:
- although the term 'legal costs' is not defined for r137, a plain reading of the opening words of r137(1) in the context of the other provisions of Part 8, Division 2 of the Regulation suggests that the term has been used to refer to the legal professional costs recoverable under rr135 and 136;
- counsel’s fees are usually described as an 'outlay' on an assessment of costs. On this point, the plaintiff argued that the term 'legal costs' had not been used consistently in the Act or the Regulation. In particular, in section 290A of the Act, a financial statement must include details of 'legal costs' and 'likely legal costs' which are understood to include counsel's fees.
However, despite the different interpretation, His Honour considered the various references did not displace the plain reading of 'legal costs', nor did it establish a basis to recover counsel's fees.
The Application was dismissed.
Court of Appeal's decision: Counsel's fees as a recoverable outlay
The plaintiff filed an appeal against the decision of Cooper J stating that Cooper J erred in dismissing the application.
The Court of Appeal allowed the appeal and overturned the previous decision that counsel's fees were not a recoverable outlay.
The Court of Appeal held that if the term 'legal costs' in r137 is given the same meaning as that in s290A of the UCPR, it would encompass outlays and disbursements under the UCPR which are not specified as outlays in r137.
In determining the construction of r137, the Court of Appeal considered that r137 should not be construed as constituting an exhaustive list of recoverable outlays, as some of the outlays referred to would be incurred after the commencement of proceedings. These fees include filing fees, setting down fees, expenses required for a hearing, or a trial or having witnesses attend a hearing and constitute ordinary and necessary outlays or disbursements that solicitors are required to incur in conducting proceedings for a plaintiff. However, these outlays are not specified in r137.
Ultimately, the Court of Appeal held that r137 was not an exhaustive list of recoverable outlays and did not prohibit outlays that would ordinarily be recoverable under the UCPR.
Implications for cost recovery
This decision confirms that, where costs are allowable under the Regulation, a claimant can recover counsel's fees despite there being no specific provision in r137 of the Regulation relating to counsel's fees.
The Court of Appeal's interpretation of r137 and its connection to Part 17A of the UCPR is important for parties to consider when negotiating the settlement of Regulation costs.
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